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Whether a duty of care was owed by a project manager to an employer in respect of ensuring that a contract containing a liquidated damages clause was agreed with a contractor

Facts

The claimant employed the defendant to project manage the building of three construction projects on its property. The works were carried out by a contractor and were completed to a satisfactory standard, but significantly later than the claimant had envisaged. The contractor stated that it was entitled to an extension of time. The works were carried out under letters of intent, with the contract only being agreed through mediation after the works were complete. The contract contained a clause limiting the claimant’s ability to claim for delay. The claimant sought damages against the defendant on the basis that the defendant had failed to exercise reasonable care and skill in the exercise of the build and procurement process from the contractor and that this failure had caused the claimant loss.

Issue

The issue in this context was whether the defendant owed a duty of care to the claimant in respect of ensuring that it was entitled to liquidated damages for delay in the agreement with the contractor.

Held

It was held that the defendant did owe a duty of care to the claimant and had failed in that duty by failing to exert sufficient pressure on the contractor to finalise the contract. The breach caused loss because if there was no breach the claimant would have taken steps to ensure that it was entitled to liquidated damages and there was a real possibility that the contractor would have agreed to those terms.

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